Summary: Continental Partners arranged $11,150,000 of mini-perm debt financing for three commercial assets in greater Sacramento County. The office, industrial and retail properties were refinanced in a portfolio transaction totaling 153,370 SF. The total loan commitment consisted of $11,150,000 or 70% of the total stabilized value. Initial funding was $9,000,000 with the additional $2,150,000 available for earn-out as new leases are signed. The 5-year WSJ Prime-based loan floats at 1% over the Prime rate with a floor of 4.25%.
Opportunity: The blended occupancy rate for the portfolio transaction was only 62% with one asset completely vacant. The market was also hit harder in the downturn, when compared to primary CBD’s, with Lenders still reluctant to reenter. Tenants were circling the vacant space, but no formal LOI’s had been submitted.
Result: Continental Partners was able to source competitive mini-perm financing through an international banking correspondent. The Sponsor’s request was for a bridge-like structure with flexible prepay. By cross collateralizing and pooling the assets into one loan, Continental Partners was able to fund with mini-perm pricing versus traditional bridge debt which can be much more expensive. Incorporating an earn-out structure kept the Sponsor costs down and by structuring release provisions into the loan docs, the Sponsor can sell off assets individually while the loan is resized to the pro rata share of the remaining collateral.